Social startup Punchcast aims for sweet spot between Facebook and YouTube

A social media startup in Toronto is hoping investors who can’t jump on the Facebook Inc. gold rush might open their wallets to budding companies.

Punchcast Inc., a new social media platform, is attempting to piggyback on the Facebook IPO hype to raise $1-million to $2-million in funding.

“It’s going to be a test for social media. Is the market legitimizing social media? And will it be more of an OK thing for investors to put their money behind it,” said Punchcast’s community architect Mark Sandford.

‘I wanted to create a space, where it doesn’t matter what you’re into’

Punchcast is an online platform that seeks to bridge a social gap between Facebook, where relationships are based on people you know in the off­line world, and sharing sites such as YouTube and Twitter, which the company says are overloaded beyond the point of practicality.

YouTube boasts 60 hours of video uploaded to its site every minute, which Punchcast says is too much information unless it’s effectively mined. “That’s a century every 10 days. There has to be some way to find the right information that you want,” Mr. Sanford said.

The idea came from founder and chief executive Conor Lynch’s frustration with not having Facebook connections with people who shared his eclectic interests, such as Roman history and English literature.

“I’d post something and no one would get it,” Mr. Lynch said. “I wanted to create a space, where it doesn’t matter what you’re into, you can shoot something out there are you’re going to get validation from people who really do care about the same things.”

Punchcast uses algorithms to connect users with like people and like interests. It has accumulated almost 3,500 users since January by targeting niche interest groups, such as BMX mountain bike fans, and building communities outward.

George Swan, a wealth manager for high-net-worth individuals, said his clients have invested in Punchcast because they see the potential for it to take off as Pinterest Inc. has done

“You could think of groups of people that would really benefit from information filtering in a quality way,” Mr. Swan said of Punchcast. Pinterest got an investing boost as Tokyo-based Rakuten Inc., the company that owns Kobo Inc., announced Thursday it will invest US$100-million into the photo-sharing website.

After raising $500,000 in seed funding, Punchcast is hoping to ramp up funding by capitalizing on increased interest in social media.

“What the Facebook IPO represents is sort of a proof of concept for social media for the Canadian investment set, which has traditionally been a bit more conservative than investors in the U.S.,” Mr. Lynch said.

Mr. Lynch said Canadians prefer to invest in more tangible goods and commodities than tech startups.

Ryan Holmes, chief executive of Vancouver-based HootSuite — a platform that manages users’ multiple social media accounts at once — said Canada needs a “PayPal” mafia, referencing a group of investors that exited PayPal Inc. and went on to reinvest in new online startups. “I don’t think that we’ve had a significantly major exit with enough people getting upside, that has created this ecosystem around investment in consumer Web.”